I just bought a house built in 1920. The kitchen is very small and we are trying to DIY remodel it to make it more functional. The biggest stumbling block is the chimney. It has been drywalled over sticks out about 28" creating a dead space in our already very cramped kitchen. We cut a little hole in the drywall to see how much space we actually had, and found that there was 12" of empty space, then pipes and wires running over wood paneling, which we assume is covering the chimney. We really want to get rid of the drywall so we can have that extra foot of space, but can't just leave the pipes and wires exposed. Any suggestions?

Indeed - Re-routing the popes and wires could be a major pain. Is the chimney still in use? Do you need a new heating system? if its in use and you vent your heating system through it and your heating system is on its last legs you could upgrade your heating to one that doesnt use the chymney. Then it could be removed. Yor water heater could also vent in the chymney. Could be for a firepalce too.

if you have good access below and reasonable access to where all those pipes and wires go to then it should not be too hard.

THIS ISNT A WEEKEND PROJECT.

There are a lot of things that would and could be impacted. Your kitchen will be a construction zone for a while. You may be cutting out plaster in all the locations where those pipes and wires go plus creating a new chase, or opening up a wall, somewhere else.

Make sure you know what you are getting into before you start tearing further into things.

The chimney is not being used to vent anything, and the pipes and wires are accessible from the basement below. I like the rustic look of the chimney and would rather not remove it. On the other hand, ripping out big strips of plaster wall and having to replace them seems like a heck of a lot of extra work just to conceal a few wires.

Hello AK:
I can feel your pain there. Here is another consideration for you: try running the wires inside the chimney; you could use a piece of ABS (black plastic) pipe if it would show in the fireplace and keep it in the back corner where it wouldn't be noticed so much.
Glenn